A rise in capital gains tax would make Trotskyites proud

Both the Conservative leadership and the Liberal Democrats are committed to the doctrine of egalitarianism. "Fairness" and "equality" were at the centre of their election campaigns, and the coalition agreement makes clear that those on low incomes – arguably the main beneficiaries of New Labour largesse - should be protected from measures designed to tackle the budget deficit.

It is, therefore, unsurprising that the Lib-Con realignment of the tax system involves increasing the personal allowance to benefit the relatively low paid, while hiking capital gains tax (CGT) – generally paid by the relatively wealthy - to rates of up to 50 per cent.

Raising the personal allowance for income tax is worthwhile. It will help improve work incentives by ameliorating the impact of withdrawn benefits and tax credits. Nevertheless, it makes no sense whatsoever to fund this measure by increasing taxes on the investment that actually creates jobs in the first place.